As Walmart is one of the biggest retailers in the world they need to deal with the huge number of suppliers around the world. To achieve their goal by providing goods for customer whenever and wherever they wanted them. So, to deal with this huge number of supplies Walmart introduced many supply chain innovation which gets accepted by the retail industry. We will discuss the impact of some innovation on reducing logistic cost and better matching of the supply chain:
Walmart is the first company who introduce vendor managed inventory (VMI), which help them the mutually beneficial relationship between them self and suppliers. How?
Walmart use satellite network system to share information about retailer which it calls RetailLink. This process of sharing information has benefits which allow manufacturers/suppliers to assume the role of inventory planning for Walmart, instead of Walmart reordering when the inventory been exhausted the supplier stock and replenishes in more appropriate time and level. So, if customer order/buy so much the manufactures will produce and send products automatically directly to Walmart without any order from Walmart because manufacturers/suppliers already monitor the goods sold and have access to information about demand, stock in and stock out. The advantage of this that Walmart will get read of responsibility of stock even the cost of stock transfer to suppliers. While, the advantage of suppliers that they will get information about the demand so they will avoid lean manufacturing like (inventory, movement, waiting and delays, overproduction, over-processing, defects). Moreover, Walmart not only shares information they also set a clear expectation for both parties in the successful long-term relationship, communication and relationship networks with suppliers to improve the low inventories material flow.
Walmart also focuses on improving the cost structures which allowed it to offer low everyday price. Also, they work directly with manufactures avoiding distribution, this leads to more efficiently manage the supply chain and reduce cost. When Walmart give their supplier more responsibility for managing their inventory, its help to lower the size of inventory which leads to reducing inventory cost.